Examination of Witnesses (Questions 299
- 319)
WEDNESDAY 18 OCTOBER 2006
MR PETER
KENDALL, MR
MARTIN HAWORTH
AND MS
CARMEN SUÁREZ
Q299 Chairman: Can I welcome our
first set of witnesses from the National Farmers' Union to this
further evidence session on the UK Government's Vision for CAP
documentation. Can I formally welcome you, I think for the first
time, to the Committee—is that right, Peter—in your
role as President?
Mr Kendall: I came the day after
I was elected actually on renewable fuels.
Q300 Chairman: You did. Forgive me.
I will not say that you made no impact at all! I had it firmly
fixed in my mind that this was going to be your first outing.
This is your first outing on the CAP since you took over. Forgive
me for having a momentary lapse of memory but, nonetheless, as
always, you are very welcome. You are supported by Martin Howarth,
the Union's Director of Policy, and Carmen Suárez, the
Chief Economist. Thank you all very much for coming. I think you
are going to start with a short statement to set the scene and
then we will ask some questions. So, Peter, fire away.
Mr Kendall: Thank you very much
indeed for inviting us to come and share some of our views with
you. To pick up, first of all, on the document as it was presented,
I think we were disappointed that it failed to recognise immediately
the reforms that had gone on in 2003 which, I think, from the
National Audit Office Committee at the moment, we know still hang
over the industry very significantly, the fact that we also now
have Commissioner Fischer Boel talking about a simplification
and looking at that reform of 2003, how the Health Check in 2008
and the major reform of 2003 will impact. We think it was a disappointing
document in as much as it did not set out any route map on the
direction of travel we were going in other than an end position.
Certainly, from listening to Mariann Fischer Boel speak and the
train of thought she develops, we share the view of simplifying
CAP, we share the view of making steps that will help move towards
that simplified CAP which we feel is a more constructive debate.
What we also consider about the publication of the Treasury/Defra
document was the timing. It came, just after we had had the unfortunate
discussion on the CAP budget, which again I know caused significant
animosity within Europe about the way that had been done as part
of a bigger deal. The tactics involved with these documents always
looking at very a radical reform, in contrast to what Mariann
Fischer Boel says about setting out any programme of simplification
and moving to a better place, we think does alienate our European
colleagues quite significantly. It always goes for major reform
and scrapping of CAP support for the farming industry, and when
we look at the simplification again, the Health Check in 2008,
I have tried to suggest that engaging with our partners within
Europe, having a discussion about where we are heading and the
way we want to move, is much more helpful than just by saying
that our aim is to do away with all agricultural support. We,
of course, as an organisation that represents both England and
Wales, have some dilemmas on the fact that we now have a regional
system in England and we have an historic system in Wales. I talked
to farmers in Wales. I was down there only recently. Concern of
farmers in Wales, when you talk about simplification and moving
the whole CAP debate forward is one that, without doubt, leaves
them in absolute horror and fear. They see what has gone on in
England. Again I refer to the National Audit Committee Report
of how much late payments have caused damage to the industry,
the bureaucracy that has been involved in it and also the redistribution
that has gone on through the very wide-ranging making of payments
to all sorts of classifications of land. So, members in Wales
are concerned about how the CAP evolves in the same way that we
are, but they come from a different position, and so I think it
is important that I acknowledge, when we look at how we respond
to this, that Wales comes from a position of seeing a badly implemented
English scheme, they see a lot of redistribution and they are
nervous of how fast we move forward. And from England, certainly
having been pushed as a guinea pig (and we feel we are suffering
quite significantly from poor implementation), we would like to
see uniformity and, when we look at Mariann Fischer Boel's proposals,
we are very keen on simplifying the whole system of CAP. We would
go as far as looking at the removal of intervention, looking at
the removal of set-aside, trying to get towards a place where
there is less distortion. We support full decoupling as a major
part of that. As an organisation, we want to see industry prosper
on the back of less distortion, less meddling, and so we are going
to be coming into the issue of modulation. We want to see that
as uniform as possible throughout the EU and not having very wide
distortions between Member States. So, we very much endorse what
Mariann Fischer Boel is trying to do with simplifying the CAP.
Q301 Chairman: Can I follow up on
one thing that you said. You were talking with some emphasis on
working with others. When two members of the Committee went to
a meeting of European parliamentarians in Helsinki last week to
listen again to the Commissioner putting forward a reform agenda,
one of the response speakers was from COPA, and this was like
no change under any circumstances, and I think Roger Williams,
who was there with me, now would back me up on that. As he went
on, so his desire to see absolutely no change in the present situation
mounted with volumes of rhetoric. Equally, when we went on our
inquiry to Berlin, we met with the German Farmers' Union, and
their official position was no change until 2013. That appears
to be of the official position of the French. So, do you find
anybody who is reform-minded in terms of your colleague unions
that you do speak with regularly in other parts of the European
Union?
Mr Kendall: While you were in
Helsinki I was in Sweden last week, and they share very much a
simplification path that I have been advocating and talking about,
and certainly the Danes would be similarly minded. I think the
Germans, when you talk quietly to them, accept the need for a
simplification of CAP and support a large amount of what Mariann
Fischer Boel is talking about. You have made reference to COPA.
COPA is a thorn in my side. I am new to this job, as you pointed
out in the introduction, and an organisation that has little or
no input to the Commission on constructively trying to have a
dialogue about reform is not very valuable, and Martin, as Director
of Policy, who has a lot of involvement in Brussels, will know
that one of my key objectives is to make COPA much more effective
in helping us have a dialogue with the Commission.
Q302 Chairman: Let me ask you a straightforward
question that I have put to everybody that we have talked to about
this. What do you think the purpose now should be of the Common
Agricultural Policy? It is defined in Article 33 of the Treaty
but nobody is talking about changing the words in Article 33.
Is there now another purpose? Here we are, in the early years
of the 21st century, facing a different world, a different farming
environment, than the one when the original words were conceived,
the original purpose was decided. What do you think from the NFU's
point of view is the purpose of the CAP?
Mr Haworth: When we look at the
original words of Article 33, I do not think that we would expect
or would wish to see a big change in them. I think they have been
flexible enough to admit changes over time. It is clear that the
time we are living in is very different from the time when these
words were written, but we would not necessarily think that there
is a need to change the text of the Treaty in order to have a
further evolution of the policy.
Q303 Chairman: That does not answer
my question. What you say is that you are happy with some words
that were written down quite a long time ago. Do I infer from
that that the purpose, as in the Treaty, is what the NFU thinks
the CAP should be? I ask this in the context of now a world where
decoupling has entered in, where decisions on land use are becoming
more commercial and where the environmental agenda is being established
under rural development plans. It is a different scenario, but
I would be interested to know what you think the purpose of it
is.
Mr Kendall: If I could, as a farmer,
reply to that, someone who wants to achieve my returns from the
market place, and I am keen to be seen to be earning from my sales
of crops, that is what helps me run the business and keeps the
business viable, but I have to acknowledge that in the world of
agricultural products it is not a perfect market place, there
are distortions. There are other countries around the world that
see agriculture as very important to their national economy and,
therefore, offload or have export restitutions that distort the
global market place. I think when you have that position the global
market of wheat often reflects the surplus value of wheat rather
than the actual cost of production. I think there is a need to
have some sort of protection, some sort of cushion, for when you
face the environmental constraints that I have as a European farmer.
I do have constraints; I do have quite a populated island. I am
competing with people from the Ukraine, from the United States,
where export restitutions are commonly used. I need some sort
of protection; otherwise I think we would see, as I saw Mariann
Fischer Boel refer to, large land abandonment because we would
have our industry at too large a risk. It is a desire to move
to that market place, but I think the world has yet to move and
the whole agricultural global market place is not in a position
for us to do that.
Q304 Chairman: Do I impute from that
that your purpose is to maintain active use of the current cultivable
land base, taking into account external cost pressures and environmental
and regulatory requirements within the European Union?
Mr Kendall: Representing farmers,
I certainly am very excited by the opportunities that land can
fulfil. I think we have lots of uses. I spoke to this Committee
last time about renewable energy. I think it would be very short-sighted,
particularly with the Government and the whole of Parliament having
such a priority on climate change at this moment in time, to in
any way downgrade the resource of land and farming and the agricultural
industry. I do think we should find a proactive way of making
sure agriculture, the industry and the ancillary trades, is ready
and waiting for when we need it, and in the short-term, through
renewable energy. I know that Mariann Fischer Boel again talked
about bioethanol production. If that can be a way in which we
can keep the industry in a good, healthy state, we are using the
land in a sensible, pragmatic way to save CO2 benefits and keep
the infrastructure in place, I think that is a very worthwhile
use for agricultural land.
Q305 Patrick Hall: I can understand
the attraction, and probably the good sense, of not frightening
the horses by sticking to a step-by-step simplification, but is
there still no case for a vision of the CAP? You may not like,
in fact you do not like, the Treasury/Defra one, because I have
read your evidence, okay, but does the NFU have a vision for the
CAP. I have been looking for this, not just from the NFU, but
when we went to Germany and France, and lots of words are used
but I wonder if really, when it comes to it, it is a status
quo and protection that is, emotionally at least, what people
are wedded to?
Mr Kendall: I hope you would see
a very different response from the NFU in England and Wales. I
think we have always tried to be forward thinking. We advocated
decoupling. My very first outing when I was Deputy President a
couple of years ago was to go and bat amongst COPA. Our colleagues—you
might not think it a concern—are not very adventurous. I
was asked to go first on the issue of decoupling and I was the
only one out of 25 who advocated full decoupling. I very quickly
realised what a lonely place it was to be, but it need not always
be. People are trying to acknowledge the need for reform and change.
I think what we see out of the 2003 reform is a more distorted
and a less agricultural policy than we have ever seen before.
So, we are very keen to see a simplification and a bringing back,
a reuniting, of the Common Agricultural Policy. We look, as I
mentioned previously, at the whole basis, the fact that some sectors
are still coupled, the fact that we have set-aside, the fact that
we have intervention. I think we have been on record as saying
that the failure of the WTO round might look good on the outside
of farming, but, again, on the inside we think we need to have
a multilateral agreement. So, we are trying to engage as proactively
as possible in progressive reform of the CAP.
Q306 Patrick Hall: When it comes
down to basics, as your colleague has said, there is no need to
change what it is all about.
Mr Haworth: I am sorry, I thought
I said there is no need to change the words of the Treaty as a
prerequisite to changing the policy. As far as the `Vision' is
concerned, I think we said in our document, we did not necessarily
disagree with the end point of the `Vision' that Defra and the
Treasury had given. As Peter Kendall has said, every farmer would
like to live from the market and not from public support. That
is a disposition that everybody has. The question is how we get
there. It seems to us maybe more important and tactically a better
way of proceeding than announcing a vision which is antagonising
people by leading them to believe that we want to get there very
quickly or want to get rid of all support as soon as possible.
Q307 Patrick Hall: The Government's
document talks about an end of support by 2020?
Mr Haworth: Yes.
Q308 Patrick Hall: As I think Peter
was saying, there is a case for continuing some form of protection
beyond that. That CAP has to remain reformed but keeping protection.
Mr Haworth: Yes.
Mr Kendall: I have made it a condition
that the rest of the world needs to move with us, and what we
cannot have is unilateral reforming arm CAP while other countries
around the world use our market as a dumping ground. Having mentioned
what I said about climate change and the ability to produce renewable
energy and making sure we had a strong supply base of good, healthy,
nutritious food, that would be, I think, a very detrimental policy
to take. So, yes, I think we are very keen to move. As I said,
as a farmer I would like to earn my money from the market place,
but while other countries continue to treat agriculture as looking
after their own market first and then using surpluses elsewhere,
that would be a damaging goal to set that we just want to be free
of support. It is a condition.
Mr Haworth: We would not necessarily
see 2020 as being unachievable. The question is, if farmers are
going to live by the market without support or protection, what
steps are needed to get there, which was singularly lacking from
the document. We would say, firstly, there has to be a worldwide
movement, we cannot remove support and protection in Europe whilst
the Americans continue, in fact, to increase their support and
protection. We should move there more or less together at a European
level. We cannot have a single European market with very different
levels of support, which we have got at the moment. Thirdly, and
perhaps most importantly of all, if farmers are going to earn
their living from the market, the market has to work far better
than it does at the moment, because at the present time there
are significant problems with the functionality of the food market.
Q309 Chairman: I presume, Martin,
that you mean both from the supply well as the buying side of
it.
Mr Haworth: Yes.
Q310 James Duddridge: To what extent
is food security regarded by the NFU as a policy objective of
the Common Agricultural Policy?
Mr Kendall: I think food security
is a useful goal for us to set without getting hung up on targets.
The way I would view it would be to look at the ability of the
land to be ready and in a fit state to produce as much food as
we require. One thing we have seen out of decoupling is that markets
now drive what we grow and produce on our farms; so by saying
we should be self-sufficient in a certain number of key products
I think would be a wrong idea, but (apples for example) if we
can find our land, our natural comparative advantages lie in certain
different crops. I think we are a fantastic country for growing
grass and producing milk, for example. I would hate to see that
erode because of a poorly functioning supply chain. I think I
would want to see the infrastructure of agriculture, I would want
to see the land base kept in a really healthy, vibrant state so
that we are in a position where we can feed the needs of the country,
but setting goals and targets, specific numbers of what we should
meet in different sectors, I think would be going back to an old-fashioned
form of agricultural policy.
Q311 Chairman: The question of food
security comes in here, the word "risk" also appears.
What do you think are the risks that Europe faces in maintaining
a sufficiency of food supplies from within its own borders for
the people who live there?
Mr Kendall: I think there are
many challenges, but I do think, if we are removing agricultural
support, while having a market place, as I say, that is imperfect
at this moment in time, we could see large areas of Europe not
farmed. I have concerns about some of the disadvantaged areas
of the United Kingdom where they do deliver, I think, very genuine
public goods. My farm in Bedfordshire, probably nobody would not
argue that that is of great outstanding natural beauty, though
some might tell me off for that. When I look at some of the disadvantaged
areas, some of the hill areas—I was up in Staffordshire
recently—some of those areas, I am sure, will need continual
support to thrive producing public goods. I do not want to see
abandonment of land on the basis that it cannot produce some agricultural
by-product as well. It is very important that we use our natural
resources where we need to.
Q312 Chairman: Can we be absolutely
clear what you are saying. You are saying that you think there
would come a critical mass of land abandonment that would effectively
then influence the level of agricultural production for food crops,
and that would, if you like, present an internal threat to the
secure supply of food from within Europe's borders. Is that the
correct understanding?
Ms Suárez: That is certainly
true, and I think it is quite important also to highlight that
that critical mass is important, not only in terms of the actual
land that is devoted to production but also in terms of the infrastructure
that is necessary for the agricultural sector. We have had examples
in this country, for instance what has happened during the 1990s
to the Pig sector, that proved the importance of maintaining the
infrastructure in place, and you can enter, as you indicated,
into a kind of vicious circle in which, despite the increased
efficiency of the sector, the infrastructure is not there therefore
the efficiency is not reflected in an increase in the availability
of food.
Q313 Chairman: But the `Vision' document
is pretty strong on saying, "You need not worry, oh, Europe
about the food supply situation because the world food market
will take care of any problems that we have." How do you
rebut that view of the `Vision' document?
Ms Suárez: I think that
it is quite interesting that since the `Vision' document has been
released there seems to be a change in the Government's vision
about what is involved in the agricultural sector. We have had
very recent statements by the Secretary of State himself declaring
the importance of agriculture as a productive sector, as a sector
that goes beyond the role of managing the landscape, but being
as important as it is, it is a goal that needs to go together
with the production of food and non-food products. I think those
statements in themselves show that there is more to food security
than initially meets the eye. I think that recent developments
in terms of climate change, in terms of geopolitical events, in
terms of the pandemic heath scares and also we cannot forget that
when we talk about some of the main agricultural communities,
we talk about, for instance, combinable crops, the level of stocks
to consumption, the ratio of stocks to consumption, has been reduced
very much in the last years. So, we are coming to a situation
in which agricultural commodities have much tighter markets than
they have had in the past and that change in the situation grants
a review to the policy that we need to adopt.
Q314 Chairman: It would be very helpful
if you could send us a supplementary note on the subject of stocks
that you mentioned.
Mr Kendall: Absolutely.[7]
Q315 Mr Williams: The capacity to
produce food does not just depend upon the quality of the soil,
though, does it, it depends on the presence of breeding flocks
and herds, of buildings and machinery. Do you think that the present
reform, the decoupled support that farming receives at the moment,
is going to result in a reduction of capacity, because breeding
herds, breeding flocks will be reduced?
Mr Kendall: We are already seeing
it. I was at a meeting of the NRC last week and we are seeing
probably a 10% fall in the suckler cow herd since the decoupling
introduction, which is, of course, worrying. It is one of the
reasons why I think it is so important that we have an even-handed
implementation of CAP, but to have a situation where we have coupling
of the beef sector in France in suckler cows and we have full
decoupling here, the fact we have very distorted systems throughout
the whole of Europe means that we could see, I think, faster running
down of capacity in parts of England, and maybe other parts of
the devolved regions as well, than we think would be wise; hence
the enthusiasm for our organisation to see a common agricultural
policy again, to see that people actually do produce the market
in a fair way without too much distortion.
Q316 Daniel Kawczynski: I am very
concerned about the way that the CAP is being implemented across
the European Union and the huge differences that there are in
its implementation. Last week when I met with the Secretary of
State in my capacity as Chairman of the All Party Parliamentary
Dairy Group he was somewhat surprised when I mentioned to him
that the Irish Government had recently spent £300 million
of their own money and of EU money on subsidising the Irish dairy
industry.[8]
With farmers in Wales and in my constituency so close to Ireland,
how can we have a common agricultural policy if the Irish are
doing something which totally goes against the spirit of it. What
is your organisation, Mr Kendall, doing to make the Government
report these breaches to the Commission?
Mr Kendall: In all my meetings
with the Secretary of State I have tried to argue very much in
favour of, in fact, championing what I think we can do in the
United Kingdom to actually meet our target, meet our goals, and
having a strong, productive agricultural sector. I have made a
very strong case for that, and at every opportunity I have tried
to draw to his attention where I think there are challenges and
compromises, I believe, because of a poorly implemented CAP reform
that we have such a mixture of different system. It is adversely
affecting what is going on. You are seeing quota movements in
the dairy sector because of different payment regimes in different
countries, you are seeing movements of stock occurring between
England, Wales and Scotland because of the systems that are now
being implemented. That has got to be wrong. I firmly believe
that if someone is doing the job really well on one type of farm,
he should not be receiving greatly different payments and having
very different support, whether it is agricultural or rural development.
In the case of the Irish I think it was a rounding up. Carmen
has got more details on what the Irish are doing. That will distort
what goes on, and I want our farmers to be able to operate in
as free and fair a market as possible. We do point it out to the
Government.
Q317 Chairman: Does that mean that
on the question of reducing the regulatory burden, you support
Mrs Fischer Boel's line about adopting the simplified Area Payment
Scheme. Are you happy with that?
Mr Kendall: Again, as I pointed
it out in my introduction when I commented on the fact that I
represent Wales and England, it causes a dilemma for me on that
because at the moment my Welsh members view what has happened
in England, I would not say with amusement, with astonishment.
They will have all their money probably in the first week of December,
and you know the situation that is happening in England, and so
to persuade the Welsh at the moment that they want to move to
a simplified system, they want some reassurances about how the
areas might be defined, how their payments might be shared with
non-agricultural land. The notion of having less distortion between
agricultural sectors in different countries is one of our priorities,
but the Welsh at the moment are far from convinced that is even
in the offering.
Q318 Mr Drew: Perhaps we can move
on to the crux of this, which is all about decoupling. I suppose
the good news is that Mrs Fischer Boel was absolutely four square
behind the notion that we should be looking for decoupling, but
the reality is, if other countries are looking at what we have
been through as a road map to how it can be done, I imagine they
are somewhat hesitant about going through exactly the same process
as ourselves. Talking to farmers in other countries, what encouragement
would you give to them that there is a life after the dependency
culture of direct payments for production?
Mr Kendall: Martin has got a better
knowledge of what is going on in other European countries where
they have actually implemented regional schemes significantly
more ably than we have in the UK so far.
Mr Haworth: The Germans have implemented
a scheme which is actually more complicated than ours initially,
going to a simpler system in the end, and they have managed to
do it more successfully than we have.
Q319 Mr Drew: Can you say why? We
keep hearing about the Germans. I know they have got the most
methodical defence in world football, but they do not always win
games. Why are the Germans so successful in this area?
Mr Haworth: I think it would take
me a long time to answer in full, but I would say some of the
reasons are that the Germans have a Civil Service which has probably
retained a greater capacity for implementing policies than we
have as being one issue; and another issue would be that I think
they were far more pragmatic in the way that they addressed this.
They saw that they were having the same problems as we were in
England on the complexity and the technology, computer back-up
to implementing the policy, and therefore they took an early decision
that they would make a part payment and then reconcile it afterwards,
whereas I think (and this is one of the things that has come out
in the National Audit Office Report this week) there was a certain
amount of prevarication in this country waiting to see if it would
come right and it did not. Those are the two immediate answers
I would give.
7 See Ev 112 Back
8
See Ev 224 (CAP 38) note from Irish Embassy correcting
these figures. Back
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